ALSO Group: Medium-term targets raised

ALSO is reporting record earnings in 2017, which is the seventh year in a row it has achieved this feat. Group net sales improved year-over-year by 11.4 percent to 8.9 billion euros. In the past year, ALSO has thus nearly reached the lower end of its medium-term Group net sales target of nine to twelve billion euros which it announced in 2017. In the same period, Group net profit increased by 11.2 percent to 92.5 million euros. Earnings before taxes (EBT) rose by 9.0 percent to 124.2 million euros. In 2017, EBITDA increased by 7.7 percent to 157.3 million euros. “We have exceeded our goals for 2017. Our MORE strategy is working and we continue to implement it consistently,” said Gustavo Möller-Hergt, CEO of ALSO Holding AG (SIX: ALSN). The Board of Directors has proposed a dividend of 2.75 Swiss francs per share, which represents an increase of 22.2 percent compared to the previous year. http://also.com/goto/20180223ar

The transactional Supply business increased by 11.7 percent from 6 232 to 6 964 million euros, comprising 78.3 percent of Group net sales. Solutions revenues in 2017 grew by 5.9 percent from 1 513 to 1 602 million euros, representing 18.0 percent of Group net sales. With “as-a-Service”, ALSO increased its revenues by 35.4 percent from 240 to 325 million euros, contributing 3.7 percent to Group net sales.

All 15 countries within the ALSO Group emerged stronger from the 2017 financial year and the integration of the acquired companies is proceeding according to plan. “ALSO is successfully transforming into an end-to-end solutions provider. We are pushing forward on our path,” said Gustavo Möller-Hergt.

In 2017, ALSO consistently worked on its five levers to increase results: In the business model mix, Solutions and as-a-Service were further developed. New Logistics-as-a-Service contracts with Media Markt, Swisscom and Sunrise, as well as the agreement to assume responsibility for all reverse logistics for Fujitsu in Finland, are a good basis for the further expansion of this offer. ALSO is making good progress in the "Consumptional Business" segment. ALSO currently serves 1.3 million seats in the IT-as-a-Service sector. This higher-margin business is being continuously expanded.

The vendor mix grew from more than 500 to 525 vendors. As part of the as-a-Service business model, ALSO reached agreements with almost 40 additional independent service vendors to offer over 200 new services on the ALSO Cloud Marketplace.

In optimizing the buyer mix, the focus was on increasing the share of wallet (share of a customer’s total expenditure for a certain product group at ALSO); for example, sales to small and medium-sized businesses (SMBs) were increased by 5.9 percent.In the product mix, the number of products increased from 188 000 to 250 000. In existing product categories, new products such as the HP A3 product range were added to the portfolio. In addition, ALSO has built up new product categories such as 3D printing, Managed Print Services, Internet of Things and Security.Moreover, ALSO has optimized structures and processes across the Group and successfully implemented SAP. “We see the benefits already on a daily basis. Looking forward we will be able to scale our business even better and make it more efficient," said Gustavo Möller-Hergt.

Central Europe market Segment

In the Central Europe market segment (Germany, France, Austria and Switzerland), ALSO recorded a revenue increase of 8.9 percent to 5 436 million euros (previous year: 4 992 million euros). EBT decreased by 4.4 percent to 86.7 million euros (previous year: 90.7 million euros). The result was impacted most notably by investments in personnel. In France, the team was expanded to increase market share in the SMB-segment, to strengthen LAFI (Logiciels Application Formation Information, an ALSO subsidiary), and due to the acquisition of BEIP. In Germany, the Cloud back office capability was expanded and capacity in the area of reverse logistics was strengthened. As part of the SAP implementation in ALSO Switzerland, best practice was adopted in the Group SAP system so that other country-level companies can also improve their efficiency. The central development team was strengthened to further develop the ALSO Cloud Marketplace platform.

Northern/Eastern Europe market segment

In the Northern/Eastern Europe market segment (Belgium, Denmark, Estonia, Finland, Latvia, Lithuania, the Netherlands, Norway, Poland, Sweden and Slovenia), revenues grew by 16.2 percent to 3 878 million euros (previous year: 3 337 million euros). EBT increased by 49.1 percent to 34.6 million euros (previous year: 23.2 million euros). The improvement in Poland in particular was a key driver of the result. At the same time, investments were made to improve our competitiveness in the area of logistics. The Competence Center Supplies in the Netherlands also improved its results. Earnings in Finland also continued to improve.

Employees

In the past fiscal year 2017, ALSO employed an average of 4 058 people from 44 countries, 266 more employees than in the previous year. Personnel expenses amounted to 219.3 million euros in the reporting period. This represents an increase of 4.7 percent over the previous year.Dividend distribution to shareholders of 2.75 Swiss francs per share proposed. For 2018, the Board of Directors proposes a dividend distribution from the reserve from capital contributions in the amount of 2.75 Swiss francs per share (previous year: 2.25 Swiss francs). This represents an increase of 22.2 percent and is the sixth consecutive increase. The proposal will be submitted to shareholders for approval at the Annual General Meeting on March 27, 2018. The Board of Directors continues to pursue a stable dividend policy and aims for a payout ratio of 25 to 35 percent.

Outlook

ALSO's management is increasing its medium-term goals compared to the previous year: The Group is targeting an increase in net sales to between ten and fourteen billion euros and an EBITDA margin between 2.1 and 2.6 percent. The share of Solutions is expected to be around 30 percent while 10 percent is targeted in the as-a-Service area. These shares will also depend on the weighting of potential acquisitions. ALSO expects future acquisitions to be focused on the areas of Solutions and as-a-Service. In the area of as-a-Service, the focus is on expanding usage-based business models such as Platform-, Infrastructure-, Workplace-, and Software-as-a-Service. In the area of Supply, the aim is to optimize the provider and buyer composition, product categories, and automated processes. Combined with the optimization of the structure of the business models, this will contribute to an increase in profitability.

Despite ongoing uncertainties with regard to economic conditions, ALSO is therefore confident that the targeted measures will take full effect and that an attractive return can be generated in the future, too. In 2018, business opportunities will also arise for ALSO as a result of changes in the competitive structure. Net sales increase for the full year is therefore anticipated to be above the market growth of 1.5 percent forecasted by Gartner. With regard to consolidated net profit, the increase is once again expected to be higher than forecasted sales growth.